PLS.AXPLS.AXASX
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Operator: Thank you for standing by. Welcome to the PLS Fiscal Year 2026 Interim Results. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dale Henderson, Managing Director and CEO. Please go ahead, sir.
Dale Henderson: Thank you, Jonathan. Good morning, good evening and thank you all for joining us. I'll begin by acknowledging the traditional owners on the land on which PLS operates. The Whadjuk people of the Noongar nation here in Perth and the Nyamal and Kariyarra peoples in the Pilbara. We pay our respects to elders past and present. I'm joined today on the call by Flavio Garofalo, our interim CFO, and members of our senior leadership team. This call will run for approximately an hour with time for questions. Now before turning to the numbers, I'd like to briefly step back and reflect on the structural environment shaping the industry. The global energy system continues to electrify, and batteries are increasingly becoming a strategic infrastructure in that system. And recent international discussions, including remarks for senior -- including remarks -- sorry, from senior U.S. leadership at Critical Minerals Ministerial, governments have underscored the importance of securing diversified supply chains for materials that underpin advanced technologies and battery systems. As that happens, the critical mineral supply chains that support batteries, which, of course, includes lithium are becoming strategically important. This remains a young capital-intensive industry. Demand can move quickly, supply responds slowly and capital allocation that's cyclical, making volatility inherent. In that environment, value transfers to operators with structural margins, balance sheet strength and staged growth optionality. PLS has been deliberately structured to capitalize on that reality. So against this backdrop, we have delivered a very strong first half, returning to profitability, materially improving earnings and improving the capital light restart of our Ngungaju processing facility that we announced today. Revenue, EBITDA and NPAT increased significantly year-on-year. Unit costs reduced and our balance sheet remains strong. This reflects the operating leverage strengthened during the down cycle now converting into earnings. The Ngungaju processing plant restart is a staged activation of existing infrastructure, consistent with our disciplined capital framework. Please turn to Slide 2. Our strategy remains consistent, to operate at scale, strengthen cost competitiveness and preserve balance sheet strength and pursue disciplined growth aligned with the market cycle. As market conditions improve, these pillars are increasingly working together with operational performance and cost discipline, converting into stronger earnings supported by financial resilience. Capital discipline remains the gatekeeper for any capital deployment, and we will invest only when returns are compelling and sustainable through the cycle. Importantly, execution of our strategy is anchored in balance sheet resilience and return generation, not short-term price movements. Please turn to Slide 3. This slide highlights the attributes that differentiate PLS and why they matter as the cycle strengthens. We operate a high-quality 100% owned Tier 1 asset with a cost position designed to protect margins through volatility and expand them as pricing improves. The first half was a clear demonstration of that operating leverage in action. We maintain balance sheet strength with close to $1 billion in cash and approximately $1.6 billion of total liquidity, providing flexibility and control over our capital allocation decisions. We have demonstrated execution capability, flexing production, managing costs and sequencing capital as conditions evolve. The approved restart of the Ngungaju processing plant is a current example of that discipline and practice. Finally, we have strategic exposure across the value chain beyond spodumene pricing through our partnerships and downstream initiatives, which we believe will become increasingly relevant over time. Turning to Slide 4. This slide summarizes the core outcomes for the half, improved pricing translated directly into stronger earnings, expanded margins and a return to profitability. Sales volume increased 7%, realized pricing increased 40% and underlying EBITDA was $253 million, delivering a 41% margin. Net profit after tax was $33 million compared to a loss in the prior corresponding period. From a growth perspective, as well as the Ngungaju restart, we have provided an update on the study time lines for both the P2000 project and Colina project. Now moving to Slide 5. Safety remains our highest priority. During the half, our total recordable injury frequency rate increased to 3.79, up from 3.1 in the prior period. That step back in performance is not acceptable. In response, we have intensified targeted safety initiatives and strengthened frontline leadership engagement across our operations. Encouragingly, quality safety interactions increased to 3.38 per 1,000 hours worked materially above our internal target, reinforcing proactive risk management behaviors. Beyond safety, we continue to support communities in which we operate with strong procurement levels from Australian and First Nations businesses. And with that, I'll now hand over to Flavio to take us through the financials for the half.
Flavio Garofalo: Thank you, Dale, and good morning to those on the call. Please turn to Slide 7 for a review of our key financial metrics for the half year ended 31 December 2025 or H1 FY '26. Our strong first half results reflect solid operational execution and cost discipline, combined with favorable pricing outcomes towards the end of the reporting period. Production increased 6%, while sales volume increased 7% to 446,000 tonnes. FOB unit operating cost decreased to $563 a tonne driven by operational efficiencies and the benefit of higher sales volume. Revenue of $624 million was up 47% compared to the prior corresponding half driven by a 40% improvement in realized pricing and higher sales. These factors support an underlying EBITDA of $253 million for the first half with EBITDA margin increasing to 41%. The half year end saw a return to profit with net profit after tax of $33 million, a turnaround from a loss of $69 million in the prior corresponding half. Net profit after tax included $16 million in midstream demonstration plant project costs and $39 million of noncash impacts relating to P-PLS comprising a $16 million write-down in the group's call option and $23 million equity accounted share of P-PLS losses. Moving now to Slide 8. Slide 8 shows the cash flow bridge for the half year ended 31 December 2025. Closing cash at the end of the half year remains strong at $954 million decreasing marginally by $20 million during the half, primarily due to working capital timing. The underlying cash generation of the business strengthened materially with cash margin from operations of $174 million and cash margin from operations, including mine development and sustaining capital of $111 million. As mentioned in December quarter 2 results, this included the $32 million in customer refunds from lower final pricing on FY '25 shipments, which were cash settled in early H1 FY '26, while approximately $85 million in positive pricing adjustments on the December quarter shipments are expected in the March quarter of this financial year. When adjusted for these timing differences, underlying cash margin would be approximately $291 million or $228 million including mine development and sustaining capital. This reinforces strong cash generation of the business as market conditions improve. Moving now to Slide 9. Our balance sheet remains robust, reflecting disciplined capital management and a continued focus on value creation. In addition to the group's cash balance of $954 million we have an undrawn debt capacity of $625 million under the group's revolving credit facility, providing over $1.6 billion in total liquidity for PLS. This positions us well to navigate the cycle and selectively deploy capital into value-accretive growth opportunities. Turning to working capital. Inventory remained flat with increased ore stockpiles supporting ore supply security through the wet season, largely offset by lower spodumene inventory as sales volumes exceeded production. On the liability side, borrowings remain broadly unchanged, while lease liabilities increased, reflecting new finance leases under Phase 2 of the heavy mobile equipment strategy. Overall, the balance sheet remains in a strong position. As we review our growth options, we remain focused on preserving balance sheet strength and financial flexibility, deploying capital with discipline to fund value-accretive opportunities and maximize long-term shareholder returns. I'll now hand back to Dale.
Dale Henderson: Thank you, Flavio. Now turning to Slide 10. And before turning to specific growth initiatives, I'd like to step back and consider the platform we have deliberately built through the cycle. In a strategic and volatile supply chain value accrues to operators with structural margins, balance sheet strength, staged growth optionality and trusted execution. That architecture is not built in a single period. It's developed through years of disciplined operating and capital decisions. The strength of this first half result reflects improvements in recovery, cost position, scale and financial resilience that were strengthened during the downturn, not short-term movements. The following slides demonstrate how that foundation allows us to activate growth with discipline, maintaining control over timing, preserving capital strength and sequencing expansion only when it turns resilient. So turning to Slide 11. Over recent years, we have materially strengthened our operating platform. Recovery rates have improved, scale has increased and unit costs have reduced. These improvements were delivered during a period of pricing pressure, not during a price upswing. That structural work is now evident in the first half performance, where improved pricing translated efficiently into earnings expansion. This is not simply price leverage. Its operating leverage built deliberately through disciplined execution. Importantly, our approach to growth has always been staged and disciplined. We have sequenced capital deployment carefully, expanded capacity only when returns are compelling and balance sheet strength was maintained. That track record matters. It demonstrates that the growth in PLS is not reactive to short-term price movements, but governed by return thresholds and capital discipline. This consistency underpins our credibility as we execute the next phase. Moving to Slide 12. During the recent downturn, we deliberately prioritized preservation of strength. We moderated capital expenditure, retained liquidity and maintained optionality rather than stretching the balance sheet to pursue expansion at unfavorable economics. As a result, we exited the weaker part of the cycle with approximately $950 million in cash and it's that financial resilience that gives us control over timing and capital allocation. As it relates to the market, market conditions have improved relative to the low it has experienced early in the cycle. Realized pricing increased materially during the half supported by improving sentiment and contracting activity. While volatility remains inherent in the lithium market, current conditions allow us to reassess the timing of incremental capacity within our disciplined framework. Moving to Slide 13. Against that backdrop, the Board has approved the restart of the Ngungaju processing plant with production scheduled to recommence in July '26. This is a tactical reactivation of existing infrastructure, not a greenfield expansion. Capital requirements are modest, execution risk is limited and operating costs remain within our broader cost guidance range. Ngungaju provides incremental capacity with a measured risk profile aligned to improving conditions supported by contracting arrangements with the market. Now moving to Slide 14. Beyond Ngungaju, our large-scale growth initiatives, including P2000 and Colina remain carefully sequenced within our framework. P2000 is a brownfield expansion at Pilgangoora that would increase capacity to approximately 2 million tonnes per annum, subject to FID. The feasibility study is targeted for the December quarter this calendar year. It is more advanced of the 2 projects. And importantly, as future production remains unallocated preserving strategic flexibility. Colina provides geographic diversification through a greenfield development in Brazil. Current work is focused on drilling, resource growth and optimization of the development pathway with the feasibility study targeted for the December quarter next year. Any final investment decision on either project will be driven by study outcomes, sustainable market conditions, return thresholds and balance sheet capacity. In both cases, growth remains an option, not an obligation. Moving to Slide 15. This slide places our production platform and growth pipeline in the global context. On the left, PLS produced approximately 100,000 tonnes LCE for calendar year '25 with Ngungaju in care and maintenance, positioning us among the larger primary lithium producers globally. That reflects the scale and quality of Pilgangoora today. On the right, we illustrate the stage production profile, the base is P1000 installed capacity, including the improved restart of Ngungaju. P2000 represents a brownfield expansion that would lift capacity to approximately 2 million tonnes per annum, subject to study outcomes in FID and Colina provides long-term geographic diversification, adding growth potential also subject to stage development and market conditions. All assets are 100% owned, providing full control over timing and capital allocation. Importantly, the future capacity shown here is optional, not committed. We will only proceed when returns, funding capacity and sustainable market conditions are supportive of that investment. Moving to Slide 16. In addition to our upstream expansion options, we retained measured exposure across the lithium value chain. Our approach to downstream and midstream participation is deliberate, structured to preserve capital discipline while maintaining long-term strategic optionality. As it relates to midstream, the midstream demonstration plant with construction complete in the December quarter, with commissioning updates expected in the coming months. We have also announced today that we've agreed a strategic restructure with Calix and we'll acquire full ownership of the demonstration plant. This simplifies governance, strengthens operational control, secures a perpetual royalty-free license for the technology within our primary lithium operations. As it relates to our P-PLS joint venture with POSCO, our minority interest with the JV hydroxide facility remains strategically positioned. Both trains were idled in the December quarter to preserve capital and align with market conditions, consistent with our disciplined approach. As it relates to our study with Ganfeng, we have continued to assess longer-term downstream conversion opportunities through the study. Across all of these initiatives, the principle is consistent: maintain flexibility, preserve balance sheet strength and retain exposure to value chain upside without committing capital ahead of sustainable market signals. Now moving to the market, turning to Slide 17. The lithium market remains cyclical. However, long-term fundamentals are being shaped by structural electrification trends and the pace at which new supply can respond. The following slides outline the demand backdrop and the constraints on supply and why we have pursued a disciplined through-cycle strategy. Moving to Slide 18. Global electrification is accelerating, what the International Energy Agency describes as the age of electricity. Global power demand is forecast to grow at approximately 3.6% annually to 2030, around 1,100 terawatt hours of additional demand each year. This is roughly 50% faster than the prior decade. Importantly, electricity demand is now outpacing economic growth for the first time in decades. And by 2030 is expected to grow more than twice as fast as total energy demand. That reflects a structural shift towards electricity as the primary energy carrier. As grids become more renewable heavy, battery storage becomes essential to maintaining reliability, positioning the lithium-ion technology at the center of both mobility and stationary energy systems. So for lithium, this is not a cyclical trend, it is structural expansion of the demand base. Moving to Slide 19. Against that electrification backdrop, lithium demand remains structurally strong and increasingly diversified. Electric vehicles continue to represent the largest single source of demand growth while battery energy storage is the fastest-growing segment. By 2030, EVs and energy storage combined are expected to account for more than 90% of lithium battery demand. As grids integrate higher shares of renewable generation, large-scale storage deployment is accelerating globally, adding a second major structural demand engine alongside mobility. Overall lithium demand by end user is forecast to grow at approximately 10% CAGR over the forecast period, reflecting this dual driver dynamic. Growth will not be linear. Periods of volatility and supply adjustment are inherent in commodity markets, but the underlying demand trajectory remains structurally upward. Moving now to Slide 20. The key question is how will the supply base respond to that demand trajectory? The fundamental constraint is that new supply is slow and capital intensive to deliver. In many jurisdictions, the time line from discovery to first production now extends well beyond the decade, reflecting more complex approval processes, higher environmental and social standards and increasing capital intensity. As a result, meeting projected demand will require significant new greenfield investment across the industry and sustained pricing at levels that support that investment over time. But while pricing has improved recently, this confidence in long-term price levels required to support new greenfield investment decisions remains critical to bringing on supply at the pace required. In that context, scale, cost competitive and balance sheet strength become structural advantages, particularly where producers can add capacity through stage brownfield options rather than relying on greenfield development. At PLS that means we can sequence growth deliberately, activating capacity when returns are attractive while maintaining discipline through volatility and protecting long-term value. I just offer a quick comment on the market today where we see it. As you could tell from the pricing trends we've seen recently, the market, in our view, is short. Recent pricing today is approximately around $2,100 per tonne for spodumene. This is very strong in the context of Chinese New Year, which is at this time where typically we've seen a softness for this period. So we're seeing relative to strength on a seasonal basis. The price trends have, of course, been upwards over the last week, it's been upwards -- incremental improvement about 5%. Looking back over a 2-month period, it's been 50%. And on a 6-month look back, it's been 150%. And I'd also add that as an anecdote support, we continue to see strong inbounds seeking supply. So out of all of that, this is some of the reasons which gives us confidence with the Ngungaju restart that we've announced today and the possibility for us to capture the stronger margins we're seeing in the market today. Now finally, just to finish with some closing comments. The first half of FY '26 demonstrated the strength of the PLS platform. The operating leverage strengthened during the down cycle is now translating into materially stronger earnings, reflecting a structurally more resilient business. This remains a volatile capital-intensive industry. That reality does not change, but our focus remains consistent, disciplined capital allocation, balance sheet strength and value creation through the cycle with a strong balance sheet, 100% ownership of Tier 1 assets and the restart of the Ngungaju processing plant ahead of us, we are sequencing growth from a position of control. Larger growth options remain gated by sustainable returns and capital discipline, Structural operating strengths, financial resilience and stage capital deployment define how we create long-term value and a strategic and evolving supply chain. Thank you all for your time this morning, and I'll now pass back to Jonathan to start questions.
Operator: [Operator Instructions] Our first question for today comes from the line of Mitch Ryan from Jefferies.
Mitch Ryan: Just wanted to understand the key source of ore for Ngungaju, will that be the southern pit? And how do we think about the impact on fleet size, material movements, strip ratio over the next sort of 2 years?
Dale Henderson: Sure. Thanks, Mitch. So in terms of ore feed, that will come from the full mine. It's not restricted to any particular pit. And the way Brett and team optimize processing is through the full mine and through all available pits. So it's not described to a particular pit. That being said, depending where they're at the mine plans at different points in time, they will dedicate one source, depending where they're at in the mine, but that would be the strategy there. As it relates to fleet capacity, there is a small increase in fleet and bringing on some additional operators, but it's not material. As it relates to the key lift for the operation is principally for the processing team and the need to onboard processing operators for the plant.
Mitch Ryan: And just sort of a follow-up or the other part of the question is, obviously, you've maintained CapEx guidance. I realize the CapEx to restate Ngungaju is not material, but what other parts of CapEx you have declined to allow you to maintain capital guidance? Or have you pushed some of that into FY '27. If you can give any color around what's happening within that CapEx, that would be appreciated.
Flavio Garofalo: Yes, Mitch, I can answer that. The majority of the costs in relation to the Ngungaju restart will actually be expensed. So what you'll find is essentially it will go through our P&L and hence the reason why we've set our FOB guidance will be towards the upper end of the scale from $560 to $600 a tonne.
Operator: And our next question comes from the line of Hugo Nicolaci from Goldman Sachs.
Hugo Nicolaci: Always a lot to talk about, but maybe also just on the Ngungaju restart now it's been approved. Firstly, can we just confirm, would you be making that restart decision today without that recently secured offtake agreement you announced earlier. And as a follow-on, can you talk us through the process of arriving at that $1,000 a tonne price floor just given, Dale, your previous comments around like you didn't have to get a floor that you'd have to be giving something away on the upside.
Dale Henderson: Yes, sure, Hugo. As it relates to the NLO restart. Look, I suspect we would have step forward with the decision anyways with or without that particular offtake we announced because inbound inquiry has been so strong. And had we not awarded to Canmax the other day, it would have been another strong chemical -- because there was a bunch who were keen to contract with us. And as it relates to the floor pricing, this is a negotiation. So what the team did is, of course, reach out to market to see who would be interested in offtake and ran a competitive process. And of course, floor price is a key term that we tested the market on. And the combination of terms that we secured with Canmax was really the key draw cut plus the fact that we've had an established relationship with Canmax, we had for a long number of years. And we thought that this was the right step to extend that partnership further.
Hugo Nicolaci: If I can just clarify that combination of terms. I mean is it higher spec or what is it sort of given them the confidence to offer your price for? And then maybe any color on why $1,000 a tonne and not $800 or $1,200?
Dale Henderson: So for clarity, no, there's nothing new or different in terms of product specs but that's all consistent with how we engage with our other customers. As it relates to price floor, as I said, that that's a function of the tender process and a key term we negotiate. Obviously, for a floor price, we wanted as high as possible. They wanted as low as possible. It's a negotiation. And I think where we landed is a sensible landing point. And I'd also add that I think part of the set of terms, in my view, demonstrates the premium of contracting with PLS. We're proud of the reputation as a reliable partner in this market. And we believe that's recognized and believe the set of terms we've agreed with Canmax in part reflects that.
Operator: And our next question comes from the line of Austin Yun from Macquarie.
Austin Yun: Good results. Just a quick question on [ Ngungaju ] restart, hoping to get some color on the ramp-up profile supplying additional lithium to the strong market. And also, any ore sorting technology, so any learnings from the Pilgan that you can transfer [ Ngungaju ] to lift the nameplate capacity?
Dale Henderson: Yes, thanks for your question. In terms of ramp-up profile, we'll provide more visibility on that as part of our guidance for next year, which we are targeting to release that with the June quarter results. So sorry about that. We'll have to come back to you on that one. And yes, that will be a staged ramp-up that although the plant has been in care and maintenance, it's natural to expect not necessarily a rapid ramp up. But as I say, we will offer more color on that as part of next year's guidance. As it relates to ore sorting, yes, of course, lots of learnings from the Pilgan operation, bringing that technology to life. And the team are considering whether in time to deploy that technology to Ngungaju. However, it's not a straightforward case in that the Ngungaju capacity is somewhat limited and the net benefits of that type of investment are not as strong as what we've achieved at the Pilgan unit, the relative scale differences. That being said, the numbers need to be worked through, and it is under consideration. But I suspect we wouldn't step down that path for quite some time if we were to go in that direction.
Operator: And our next question comes from the line of Levi Spry from UBS.
Levi Spry: Maybe just on P2000. So I think Ngungaju is as expected. When it comes to the next step, we've got some numbers out there, they're 2 years old. That's kind of forever in lithium land, $1.2 billion in '24 per dollar. How can we think about scope that's being considered in the feasibility? And can you particularly thinking about the flow-sheet infrastructure? And can you give us any update on permitting and construction time lines?
Dale Henderson: There's a bit in that. And most of it, in fact, all of it will come in that study outcome in the December quarter. But to offer just a slight bit of color, and we have talked a little bit of this into the release today. This will, of course, be the third processing facility at Pilgangoora. So the team is optimizing that new facility to optimize the whole in consideration of the respective strengths of Pilgan and Ngajugar. This will be plant #3. And of course, the aim here is about maximizing global lithium recoveries from the operation. Now what flows from that, the team are narrowing in on a whole ore flotation circuit, but of course, adopting the best of the best and the processing tech that we've deployed on the other plants and where it's heading would be, in my view, sort of the next evolution of processing technology for our market. So plenty of work underway around the processing thinking. To your point about capital costs, yes, it's a different environment for pricing the project from when we released that PFS in August '24. So yes, an update is definitely required there and that will come with the December study outcome. Then to the point around infrastructure, yes, we are thinking through what enabling infrastructure might make sense, potentially some pre-FID enabling infrastructure. Yes, we've got the work underway thinking through that, but yet too early to really describe what that is or any numbers. But plenty of work underway on the P2000 study.
Levi Spry: Could I just follow up on the permitting front. I mean, there's a project just down the road, the gold line that's taken a bit longer than maybe the market thought. What sort of -- what would be the steps in front of you, given that yours as brownfields?
Dale Henderson: Yes. Sorry for missing that one. No, we've secured the permits required for that expansion.
Operator: And our next question comes from the line of Matthew Frydman from MST Financial.
Matthew Frydman: Can I ask on the Canmax offtake in the Ngungaju restart. Obviously, you've got a $1,000 a tonne floor there. Is that enough to underpin a positive cash margin for Ngungaju or are you still taking some price risk there in your view, given the, I guess, the all-in cost structure of Ngungaju?
Dale Henderson: I'll give it to Flavio. Thanks, Matthew, for the question. The way we think about the operation is in aggregate. So the 2 operations combined. And for that reason, yes, very happy with the floor price of USD 1,000 per tonne.
Matthew Frydman: Okay. Got it. And then secondly, I guess following on from some of Hugo's questions earlier, what dictated exactly the size of that offtake? I guess you said you had a bunch of inbounds, potentially could have done more from a volume perspective. Is that the case? And if not, -- why did you not elect to do more? And I suppose an extension of that is could you sign more floor contracts in the future to underpin other growth options like P2000?
Dale Henderson: Sure. Yes. So as it relates to the term, the volume and the various options we've built in the PLS' election, the makeup of those, of course, is very dependent on the counterparty. So the team went out to market although we had some sort of upper bounds of what we were prepared to commit in terms of this particular offtake award. We have flexibility depending on the needs of that counterparty. So it's very much an iteration in terms of understanding the counterparties' needs and then, again, negotiating and running several strong options in parallel as you do in competitive process. To the question of could another offtake with another floor price be possible? Yes. I think is the short answer there, given what we saw through this process. And yes, interested to see what this offtake award means for the market more broadly. To our knowledge, this is a first of its kind for our market in terms of this combination of terms and maybe it's the first or more to come. Time will tell.
Operator: Our next question comes from the line of Kaan Peker from RBC.
Kaan Peker: Two for me. Just on Ngungaju, what does steady-state costs look like once Ngungaju is fully ramped? Are you still suggesting 20% to 25% higher cost versus Pilgan?
Dale Henderson: Kaan, you'll get high level of visibility when we do the guidance for next financial year. But just to preempt disappointment, we won't be breaking it out by operating plant. Apologies.
Kaan Peker: And secondly, just on P2000. If you got another floor pricing that covered commitments for P2000 at around that $1,000 a tonne floor price, would you sanction P2000 then?
Dale Henderson: Yes. Obviously, we want to see the study outcomes before we could take a view of that. But in terms of what we saw from the PFS, yes, I think would be -- we would go there. I think the -- from the PSF outcomes, the P2000 provided scale and provided a lower unit cost. At that moment in time, obviously, we need to recheck those with the new study. And that was at a cost base well below USD 1,000 per tonne. So look, let's wait for the study if it's something similar. And if the market is valuing that security of supply and we can secure floor price, I think that would be very attractive and very supportive to an FID decision.
Operator: And our next question comes from the line of Andrew Harrington from Petra Capital.
Andrew Harrington: My question is with regard to downstream processing of WA spodumene. What do you see as the prospects for that to happen outside of China within the next 5 years or so?
Dale Henderson: Yes. Thanks for the question. Look, as it relates to downstream processing in Australia, Australia has some challenges as -- if you consider the lithium market to be a global market and the jury is out if it continues to be that way given some of the overtures around dedicated supply chains, but it's a global market today. Australia is high cost in terms of power, labor, capital, and there isn't a lithium-ion battery ecosystem here. There's no consumers of the batteries in the main. There's no cathode makers, chemical makers. It's all missing. That adds to essentially -- or the absence of that makes you less competitive. So the stack of those things makes onshore processing in Australia more challenging relative to other jurisdictions, which have the opposite of all of those things, low-cost power, labor, capital and their own battery ecosystems, which, by the way, is part of the draw card for PLS to be working with POSCO in South Korea, where it has all of those things in combination. So Australia, there's some challenges to compete long term globally. But of course, it's a noble ambition. And if onshore processing can be achieved in Australia and successfully long term, why not. But there is one variant of onshore processing, which might be a more sensible landing point, and that's midstream. And midstream for those who are not aware is the concept of doing several value-added processing steps at the mine site to produce chemical product, but chemical product, which is not battery grade ready, it's more of a lithium salt type product. We think that shows strong potential for Australia potentially. Hence, we're stepping down the path of our demonstration plant and looking forward in time to seeing how that goes. Maybe that variant will go well for Australia in time, we will see.
Andrew Harrington: Okay. I guess the question wasn't specifically about downstream processing in Australia. I mean Korea and Japan stand out potentially to pick the ecosystem and other criteria you mentioned. Is that the only options? Or I'm thinking more in the sense of the world we're living in with geopolitical strategic concerns now rising very high in terms of the priorities versus just in time or lowest cost. How does that -- how do you square the circle if those concerns are priority?
Dale Henderson: Sure, sure. So a few layers to this. Look, the first is just -- and apologies for some of this a bit obvious, but the lithium industry is very young, growing rapidly. And the supply chains required for the future state of the industry are not yet built. Therefore, they need to be built. So the question is where will they be built. Now what we've got today is, of course, China, of course, is the battery ecosystem of the world. You've got a smaller version in Korea and a smaller version in Japan. And that basically is the full set of supply for the globe today. But of course, more needs to be built out and the question is where. And the driving forces of that are many. So yes, it includes geopolitical collaboration. There's a lot of talk around that, but not a lot of action, at least not yet, in our opinion. And then you've got those sort of fundamental attributes of what makes a long-term competitive battery hub ecosystem. So the cost points that you mentioned or that I mentioned, et cetera. So a lot of that is yet to grow out. But this is an area of deep work that we've done in our study pathway with Ganfeng, has been looking at exactly this and sort of studying the globe in terms of what is available where and what do we think long term makes a potential successful hub. We're studying something like more than 900 industrial parks globally. So we've got a pretty rich picture of the landscape today. But yes, as I say, plenty of moving parts shaping the way this industry grows.
Operator: And our next question comes from the line of Glyn Lawcock from Barrenjoey.
Glyn Lawcock: I just wanted to sort of hear some of the thought process behind the dividend decision because, obviously, you're confident in the market you've restarted Ngungaju. So you've got the confidence for that, but -- and you've got a massive cash pile and lots of liquidity yet you didn't have the confidence to restart the dividends. Just your thought process behind that?
Dale Henderson: It's not a -- Glyn it's not a question of confidence, it's a question of applying a capital management framework, which -- and given the half was, as you can see from the numbers. Net positive only just -- given the inflection of the market has only just occurred that translated to essentially no dividend. But what we have flagged as stated in the release today is the positive expectation of the full year, subject to, of course, the positive pricing and market outlook that we're seeing so far.
Glyn Lawcock: All right. And then maybe just as a follow-up, just again, just thinking about the logic. It obviously now clearly looks like P2000 goes first, Colina second. Just was there anything that drove that specifically to push them one before the other in that order?
Dale Henderson: Yes, is the short answer. Firstly, it's good to sort of reflect on the 2 very different projects. In the case of P2000, it's a scale brownfield expansion and more mature in terms of the study work and quite a different profile in terms of capital and commensurate offtake. As it relates to the Colina project, it's greenfields, it's earlier and a study maturity. And it's early as it relates to resource development. And this is actually one of the key focuses for that asset is the want to prioritize more drilling to grow the resource. So very much sort of mining development 101 in terms of maximizing the asset that you have in the ground. So what we're seeking to do is to do more drilling, grow the resource. And having done that, of course, then you go and size your processing plant accordingly, optimizing for value in terms of volume -- production volume versus mine life. Now outside of that, however, the enabling infrastructure works continue, and we have flagged in the release today potential pre-FID funding to support some of that enabling infrastructure. So both sets of initiatives in parallel. But what all that sort of translates to is a longer runway. We have to get more drilling done, redo the resource, do a reserve, fold that into an updated processing plant design and of course, have all that ticked and tied ready for a full FID, which is when you go back and compare that to P2000 yet there in lies -- it's different maturity levels of the 2 projects.
Operator: And our next question is a follow-up from the line of Mitch Ryan from Jefferies.
Mitch Ryan: Dale, just on Colina, you sort of said you're assessing some of the early-stage infrastructure initiatives. Can you just help us think about the range and scope of the spend and the timing of that, please?
Dale Henderson: Yes. So yes, we'll give more guidance on that later. But the makeup of it includes a short road from the highway into site, some water infrastructure from the local dam, some power. It's of that nature. As to timing, we'll come back to you. I suspect this will come in with our guidance for next year. But I can't give you any numbers on that today.
Mitch Ryan: Okay. And sorry, my last one is just -- can you just help us understand your rationale for collapsing the Calix JV?
Dale Henderson: Yes. So the rationale there was really about enabling PLS more flexibility under a JV structure. Of course, as JV partners, you have to enroll your partner in all decisions. This restructure with PLS taking 100% ownership, of course, gives us full autonomy to optimize that facility in the context of the broader Pilgangoora operation as we see fit. So it's really about our flexibility. And I just want to reassure that in terms of Calix and PLS, we both remain as enthusiastic and as committed as ever to the potential of this project and long-term commercialization and Calix will be continuing to support us, including the commissioning activities and ultimately, the commercialization. We will do that jointly as set out in the release today.
Operator: And our next question comes from the line of Lyndon Fagan from JPMorgan.
Lyndon Fagan: Look, the first one is just on the P2000 study, are you actually considering any other scope i.e., P1500 or something above 2000? And I guess why 2000? Is there a governing factor to jump so high, I guess. And then just a follow-up is, I guess, if we're talking about Colina, we've moved the outcomes out for another year. It was originally coming in before P2000. I guess, when would you anticipate first production for that?
Dale Henderson: Yes, sure. Thanks for those questions. As it relates to P2000, the step-up there is driven by the -- really a practical reality of -- in order -- we've sort of maxed out our infrastructure at Pilgangoora. So to build any more processing capacity, it requires building a new crushed ore stockpile and ROM, the whole [indiscernible], if you will. So then the question becomes what's the optimal size for that. And larger essentially works better to achieve those economies of scale. So it is possible we could build a smaller version. However, we wouldn't enjoy the scale benefits and the capital efficiency benefits you get from that larger operation. So that's the principal reason. And we've taken the view that when you consider the growth outlook for the market, P2000 is definitely needed, so is Colina and so it's a whole lot more. The question is not if, it's when. It's about timing it appropriately. So as for P2000, we will do exactly that. So we will time it appropriately. We want to make sure we're deploying our shareholders' capital as efficiently as possible, and we'll time that into market when that makes sense for the market. As it relates to Colina, sorry, what was your question on Colina?
Lyndon Fagan: Just when you would anticipate first production as a ballpark?
Dale Henderson: Yes. We haven't reset that outlook because it very much -- we very much have to step through the drilling and see where we can grow the resource to. That is the key determinant, which, of course, informs the design and ultimately, the delivery pathway. But what we'll seek to do is provide a bit more color on this in some future disclosures just to at least give a tentative outlook for what we're aiming to achieve there.
Lyndon Fagan: And is there any early findings relative to the study that's out there that you would want to call out? .
Dale Henderson: Not at this stage other than to reassure, we're very happy with everything we've seen. If anything, we -- things have proved up to the upside. So metallurgy, what we're seeing in the ground, the guys have done deeper levels of work of course in all manner in terms of infrastructure, ore body understanding, we've had all of our specialists over there working with the Brazilian team and been very delighted at the quality of the work done, the quality of the asset. So looking forward to providing more visibility in time, but it's all looking good so far.
James Fuller: Dave, we're going to move to some online questions from the webcast. Does the midstream processing plant just save transport costs due to concentration? Or does it offer other value adds to the product?
Dale Henderson: Yes, there's a number of benefits for the midstream product. First and foremost, the alumina silicate component of the spodumene concentrate that we ship today does not get shipped. It gets left at the mine site where it can get more readily handled. So that, of course, essentially solves for what is a waste product in many markets, albeit some markets put into cement, but leaves that at the mine site, that, of course, saves on transport. Then the actual lithium salt itself is materially concentrated. So there's another transport saving there. And then there's the carbon footprint. So the key distinguishing feature of the demonstration plant and the midstream project that we're pursuing here is the use of Calix's electric calciner. And when you look at sort of the waterfall of carbon consumption for spodumene concentrate from ore body through to hydroxide gate, the biggest draw of carbon is the calciner. So this effectively solves that. So that would be a further benefit. And then there's just what is the cost of production and what additional margin can be realized. Now this is the bit that we're yet to validate and why we're building the demonstration plant. We want to see does the energy efficiency of the calciner, the combination of other cost inputs to produce this lithium salt relative to the sales price does it net a larger margin than shipping spodumene concentrate through the traditional pathway. So lots of benefits for pursuing this.
James Fuller: Okay. Another midstream question around the use of fine ore and coarse ore. So the question is around can we use coarse ore through the midstream plant as well as fines or can you produce more fines by grinding?
Dale Henderson: Yes. So as a function of the nature of the calciner being essentially a flash calciner for the spodumene concentrate to convert through alpha to beta phase, the particle size needs to be small. Therefore, fines is required. Now if it turns out that the economics make sense to grind our coarse or finer to a cheaper fines and then feed it through the calciner, well, that's a possible processing pathway. But we cannot feed coarse product through the calciner.
James Fuller: Okay. Thank you. We had a number of other questions, which we've already addressed. So that's the end of questions online.
Dale Henderson: Great. Well, thank you all for dialing today for our half year results. Looking forward to updating again in due course. Thank you for your time.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.